Cairn putting its energies into global expansion plans

CAIRN Energy yesterday outlined ambitious global expansion plans, revealing it is in the running to exploit Iraq's vast oil reserves, promising to press ahead with exploration in Greenland and reporting "advanced" progress in India.

The Edinburgh-based group, run by chief executive Sir Bill Gammell, told shareholders at its AGM that it had "a very strong position in the market and significant growth potential".

Dr Mike Watts, Cairn's exploration director and deputy chief executive, said the firm's experience in India, where it has discovered vast reserves, gave the global expansion plans credibility.

"We have built a tremendous knowledge and expertise of developing oil fields in Rajasthan and that expertise and knowledge is actually transferable to other parts of the world," said Watts.

Last month, Scotland's biggest independent oil producer made it on to an Iraqi government shortlist of smaller oil and gas explorers set to exploit some of the country's vast oil reserves. Of the companies on the list, Cairn is the smallest.

The Iraqi Oil Ministry said the nine companies were selected from 38 that submitted qualification documents early this year. The ministry expects to sign contracts with the shortlisted companies by the end of the year.

This second round comes behind an earlier list of licences given to 40 global oil companies including Shell, BP and Total.

The licences open to the foreign companies cover 11 gas and oilfields, including the massive West Qurna field where reserves are believed to extend to some 20 billion barrels of oil. Oil minister Hussein al-Shahristani said the licences could boost Iraqi oil production by up to 2.5 million barrels per day.

Watt said Cairn had its "hat in the ring in Iraq" but stressed the prospect was still speculative.

"Based on the expertise and experience we have we actually qualified in the second round," said Watt. "That is not to say we are going to be successful, we may not find something that is commercially attractive but we are in the race."

Gammell hailed the group's "extremely exciting" prospects in Greenland. Currently only Cairn plus oil giants Exxon and Chevron are exploring licences in the region.

Cairn said it expects results from well site surveys on the west coast of Greenland, in the Disko field, will be available in August.

At yesterday's AGM, private shareholder Peter de Vink said he thought Greenland was "one of the most exciting prospects for Cairn and could well make their success in India pale into insignificance".

Phil Tracy, Cairn's engineering and operations director based in India, confirmed recent elections there were "good for business".

India's new ruling Congress party, which won a majority government, is thought to be more business friendly than other more left-leaning parties. This means that projects such as Cairn's 600-mile oil pipeline currently under construction would not be "too reliant on regional bodies with their own agendas", Tracy added.

Shares in Cairn Energy closed 2.4 per cent lower at 2,395p.